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Telstra refused to confirm the move, revealed by the Australian, because it does not discuss invidual supplier contracts with the media.

Sources blamed either under-performance by Satyam or its ongoing financial scandals.

Meanwhile iGate is talking to private equity firms to get help and advice for its takeover bid for Satyam. Despite its serious financial problems - company founder Ramalinga Raju admitted inflating revenues by more than $1bn - the company is a tempting target because its shares have fallen so far.

But any bidder would need courage - the true state of Satyam's finances is still not known.

Indian media have also confirmed that the Central Bureau of Investigation is investigating the scandal and is questioning the Raju brothers and the arrested auditors from PwC.

IGate, along with Spice Group, Tech Mahindra and Larsen & Toubro have all been named as possible bidders. Satyam said last week it had received several bidders including private equity firms.

Satyam has begun the process of approving bids - companies must provide proof of funds to be considered. ®